CFE Follows "Indicators of Trouble" to Find Fraud

Joanne M. Kraynak, CFE, CIGI, is Director of Investigations for the Office of Inspector General - Florida Department of Veterans’ Affairs. She has been a Certified Fraud Examiner since 2001, and the ACFE recently asked her to tell us a little about her career, and the challenges and successes she has experienced as an anti-fraud professional.

 Q. What types of cases do you most often handle for the office of the Department of Veterans’ Affairs - OIG? Are there certain areas or types of cases you find the most challenging/interesting?  

A. Most of my cases now are administrative employee misconduct cases, although I do coordinate some cases with law enforcement.  The Florida Department of Veterans’ Affairs (FDVA) has two primary functions: 1) we assist veterans in obtaining benefits from the federal government, and 2) we own and operate seven veteran nursing homes throughout the state of Florida.  Employees in those homes, which include administrative staff, nursing, dietary... are state employees. When the staff “misbehave,” I’m called to conduct investigations regarding sexual harassment, hostile work environment, discrimination and other issues.  I also work with our auditors to conduct investigations whereby fraud is suspected regarding contracts and procurement. I’ve also had to deal with some allegations of nursing staff stealing drugs/selling drugs, stealing from residents, resident abuse (and related issues), and those cases are worked jointly with law enforcement.

Q. You spoke with us about (fraud perpetrator) Shanna Lewis and her conviction in Florida. Do you have thoughts about what makes this case significant, and lessons for other fraud examiners in bringing someone like her to justice? 

A.  It amazes me the lack in internal controls that business (and government too) fail to implement regarding safeguarding money. It is more important than ever to have proper procedures, policies and internal controls in place (as well as checks and balances) to be able to prevent, detect, and deter fraud.  With the economy in the state that it's in, there will only be more creative ways crooks try to commit fraud.  What made the Lewis case so significant to me was the LACK of internal controls… i.e. NO background check, NO segregation of duties… all the “textbook” indicators of trouble.  Currently, there is a case pending (at a local high school) whereby a teacher in charge of the yearbook allegedly embezzled approximately $50,000 over the course of three years by falsifying travel documents and receipts. Again… NO internal controls!

Q. What led you into the realm of fraud detection and prevention?  

A. This is a strange one… When I moved to Florida in 1986, I was recruited by the Florida Department of Banking and Finance/Division of Securities and Investor Protection because of my banking background.  I started out as a securities investigator.  I took to this job as if I was born into it… I progressed rapidly up into the ranks of training other investigators, teaching securities classes internally as well as externally (State of Louisiana/penny stock fraud, Commonwealth of Puerto Rico/churning, U.S. Department of the Treasury, stock fraud and manipulation) and moving up into the ranks of supervisor. I was then recruited by the Florida Office of the Attorney General and worked on economic fraud cases.  I was asked to be the lead investigator to head up a team of seven states (Florida/lead, Georgia, Tennessee, Washington, Illinois, Connecticut, and Texas) on the multi-million dollar Firestone/Ford Explorer case. This case settled for $120 million ($55 Firestone/$65 Ford) for consumers all across the United States. With changes in management in the Attorney General’s office (election), I was recruited (and wanted to get more experience in conducting internal investigations) by the Florida Department of Transportation/Office of Inspector General. I’ve been conducting OIG investigations ever since. 

Q. You joined the ACFE in 2000. How did you find out about the ACFE, and what compelled you to join?  

A. While employed with the Florida Office of the Attorney General… it was highly promoted by management that the investigators become “certified” or maintain some sort of credentials.  The office recommended the course of study, paid for it, and encouraged participation in any and all CFE training programs.

Q. What kinds of changes have you seen in the anti-fraud profession since then?  

A. As fraudsters are becoming more and more creative in their scams, the need for those in the anti-fraud profession has significantly increased.  The anti-fraud profession has grown.  Those in it have become more educated and much more savvy in the techniques used to deter, detect and prevent fraud.

Q. How has being a CFE helped you in your career and in your work?  

A. It has added a lot credibility to the numerous investigations I have conducted… it means you know what you are talking about.  In addition, I have found that defense attorneys are less likely, or are  hesitant, to question your work when they see the CFE designation after your name.  The designation is highly respected.